What Does a Promoter Do?

The sponsor is the person who initiated the organization or the founder of the company. The sponsor is the person who prepares the establishment of the company, but not all the sponsors are promoters. The sponsor must sign the company's articles of association in order to be confirmed. Both natural and legal persons can become promoters. The qualifications of promoters are generally clearly defined in national laws. In Anglo-American company law, a company sponsor is described as a person who engages in organizing a company according to a specific plan and has it carry out activities and take necessary measures to achieve its purpose. Broadly speaking, the promoters include those who set up the company, assisted the company in obtaining capital, tools, and business rights to achieve the purposes set out in the company's articles of association, and to promote the company's formal business. Their work started before the company was founded, such as looking for profit opportunities and formulating a company development plan until the company was established, which was enough to attract outside investment in the company and make this emerging company commercially viable. The U.S. Supreme Court held that sponsors are people who seek out industrial and other businesses to take advantage of or are able to make profitable investments and interest them in the plan, thereby organizing the company and making the company officially open. Countries have different regulations on the number of company sponsors: the United Kingdom, France, and Japan stipulate that there must be more than seven company sponsors, Germany requires five, and US states have different company law regulations, which are generally 2-14. ^[1]

[f q rén]

Established

Who can become a sponsor, ie what restrictions does the law have on sponsor eligibility? In general, company law in western countries stipulates that the promoter must have the capacity to act, and those who have no or limited capacity cannot act as the promoter. This is determined by the task of founding the company undertaken by the promoter. Secondly, the sponsor can be a natural person or a legal person. However, if the sponsor is a legal person, it must be a corporate legal person. Some countries and regions also stipulate that the promoters must have a local residence, or they must be nationals, or their nationals must account for a certain proportion of the promoters. Before China's "Company Law" came into effect, China had stricter restrictions on the qualifications of promoters of joint stock companies. Article 10 of the "Regulatory Opinions of Joint Stock Companies" states: "The promoters of a company shall be legal persons established within the territory of the People's Republic of China (excluding

The status of the sponsor refers to the relationship between the promoter and the company in preparation when setting up a joint stock company, and the relationship with the company after the establishment. Generally speaking, during the establishment process before the establishment of the company, the promoters are within the scope of their duties, that is, the person in charge of the company. He conducts incorporation activities internally and represents established companies externally. Once the company is legally established, the actions of the promoters become the actions of the company organs, and the rights and obligations arising from it are vested in or enjoyed by the company. If the company is not established effectively, in order to ensure the security of the transaction, the promoters shall be jointly and severally liable for the acts and costs of establishing the company. What are the reasons for the rights or obligations obtained by the promoters during the establishment of the company that will be attributed to the company established by registration in the future? There have been different doctrines in jurisprudence. There are:

Regarding the rights of the promoters, some scholars believe that the promoters can enjoy them only after the establishment of a company limited by shares, on the grounds that the promoter's direct purpose of establishing a company limited by shares is to obtain certain economic benefits. After the establishment of the company. I don't agree with this. In fact, before the establishment of a company limited by shares, the promoters also enjoyed certain rights, mainly including the right to choose the method of capital contribution and the right to choose the method of establishment. According to Article 80 of the "Company Law" of China, the promoters of a company limited by shares can make capital contributions in money or in kind, use industrial property rights, non-patent technology, and land use rights as capital contributions. However, if the promoters invest in industrial property rights or non-patented technologies, the amount must not exceed 30% of the registered capital of the company limited by shares. However, this restriction is for the promoters as a whole. For the promoters, they can negotiate with each other, and one or more sponsors can only use industrial property rights or non-patented technology to contribute. The in-kind, industrial property rights, non-patented technology, or land use rights as capital contributions must be evaluated for value. In particular, when a state-owned enterprise is converted into a company limited by shares, it is strictly prohibited to discount, sell or distribute state assets to individuals at no cost. Where capital is invested with land use rights, the appraisal and price shall be handled in accordance with the relevant provisions of laws and administrative regulations. According to Article 74 of China's "Company Law", there are two ways to establish a company limited by shares: one is to initiate the establishment; the other is to raise it. The so-called initiation and establishment refers to the establishment of a company by the promoters subscribing for all the shares that the company should issue, without raising funds from anyone other than the promoters. The so-called raise and set up refers to the establishment of a company by the promoters subscribing to a part of the company's shares to be issued, and the remaining part of the company's public offer. Which method is used to set up a company limited by shares is generally left to the discretion of the promoters. However, in the case where a state-owned enterprise is converted into a joint stock company and the sponsors are less than five, the method of raising and establishing must be adopted. In addition, according to Article 79, Section 13 of the "Company Law", the promoters can also enjoy the broader rights recorded in the company's articles of association, which do not violate the law's mandatory norms and social welfare. These rights mainly include the right to choose stock options, the right to preferential distribution of dividends, the right to preferentially subscribe for new shares, the right to preferential distribution of remaining property, the right to request remuneration, the right to compensation for expenses, and so on.

Since the promoters have a great influence on investors, companies to be established in the future, and company creditors when setting up a company limited by shares, the promoters also have considerable obligations. Generally speaking, the sponsors mainly have the following obligations.

Sponsor 's obligation to pay fully

To establish a company limited by shares, the sponsor must have a certain amount of money, otherwise it will become a nonsense. According to the second paragraph of Article 78 of the Company Law, the registered capital of a company limited by shares must not be less than 10 million yuan. In the case of establishment by way of sponsorship, the promoter must subscribe for all the shares of the company; in the case of establishment by means of fund raising, the shares subscribed by the promoter shall not be less than 35% of the total shares of the company, and the rest shall be publicly raised. As for the method of funding, the promoters can make capital contributions in monetary terms, or they can use physical objects, industrial property rights, non-patented technologies, and land use rights as capital contributions. The real objects, industrial property rights, non-patented technologies or land use rights that have been contributed as capital must be evaluated and valued in accordance with the law and converted into shares, and the value must not be overvalued or undervalued. Where the promoters use industrial property rights or non-patented technologies as capital contributions, the amount shall not exceed 20% of the registered capital of the company limited by shares.

Sponsor's faithful obligations

The promoter shall be honest without him in the process of establishing the company limited by shares. First, the sponsor's contribution must be real. Where the promoters make capital contributions in kind, industrial property rights, non-patented technology, or land use rights, they shall conduct appraisal, verify the property, and convert them into shares, and shall not overestimate or underestimate the value. Generally speaking, if the promoter is a natural or legal person, it shall not be overvalued and falsely contributed; if a state-owned large or medium-sized enterprise is converted into a company limited by shares, it shall not be undervalued and used to privately allocate state-owned assets, causing the loss of state-owned assets. The shares of the company held by the promoters after the capital contribution shall not be transferred to others within two years after the establishment of the company. After the promoters have paid the shares or paid the capital contribution, they shall not withdraw their share capital except in the case that the shares are not fully raised on time, the founding conference is not held on schedule, or the establishment conference makes a decision not to establish a company. Secondly, if a joint stock limited company is established through fundraising, it shall publicly raise funds for the unrecognized portion. Before the fundraising, the sponsor should prepare and announce the prospectus. The prospectus should be true in content, without false records, without any misleading words to investors, and not in the name of stock offerings for fraud. The prospectus should record the amount of shares subscribed by the promoters, the par value of each share and the issue price, etc. When applying for company registration, the documents submitted by the sponsor should be authentic; otherwise, the company registration authority will not register with the company, and the sponsor must bear corresponding legal responsibilities.

Sponsor 's duty of diligence

The promoters should be diligent and diligent in the process of establishing a joint stock limited company. Before starting preparations for the establishment of a company, the sponsors should conduct a full investigation and study on the necessity and feasibility of the company to be established, or ask experts to demonstrate feasibility. Only after the necessity and feasibility of the establishment of the company is affirmed, can the specific preparations for the establishment of the company be started. Secondly, the company's articles of association should be drafted, capital should be actively raised, sufficient company's share capital should be subscribed, and the company's establishment approval procedures should be handled. Review and approval), and then report to the national or provincial health reform department for approval. In the case of raising funds, the approval of the securities administration department of the State Council must also be obtained. After receiving the approval from the relevant departments, the promoters should actively prepare the prospectus and subscription letter, determine the underwriting agency, and sign the underwriting agreement. After the shares have been fully recognized, the promoter shall call the subscribers for payment of the shares. After the subscribers have paid in full, the promoters shall preside over the founding meeting of the company within 30 days. 15 days before the founding conference is held, the promoters shall notify the subscribers of the meeting date and address or make an announcement. In the process of establishing the company, the contract between the promoter and the third party in the name of the company should be performed in an active and comprehensive manner, without any delay, affecting the credibility of the company to be established in the future. people.

Obligation of sponsor to return capital

In the case of establishing a joint stock limited company by way of fundraising, after the promoters have fully identified a certain percentage of the shares, the rest shall be publicly raised to the public. In the event that the promoters publicly raise shares to the public, they must publish a prospectus and prepare a subscription letter, and they must also obtain approval from the securities administration department of the State Council. If the approved approval is found to be inconsistent with the provisions of the Company Law of China, it shall be revoked. The sponsor shall return the funds raised to the fundraiser and shall add the bank's interest on the same period deposit. If the issued shares have not been fully raised beyond the deadline specified in the prospectus, or the sponsor has not held the founding meeting within 30 days after the issued shares have been paid enough, the subscriber may request the sponsor to return the capital contribution and add the bank Interest on deposits during the same period shall not be rejected by the promoters. If, due to force majeure or major changes in operating conditions, the founding conference makes a decision not to establish a company, the promoters shall return the shares paid by the subscribers to the subscribers.